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Issues: (i) whether, on nationalisation of the coal mines, the ownership of the business itself stood transferred so as to attract section 17 of the Bengal Finance (Sales Tax) Act, 1941 and shift the registered dealer status to the transferee; (ii) whether the best judgment assessment was arbitrary and liable to be set aside for want of any rational basis.
Issue (i): whether, on nationalisation of the coal mines, the ownership of the business itself stood transferred so as to attract section 17 of the Bengal Finance (Sales Tax) Act, 1941 and shift the registered dealer status to the transferee.
Analysis: The transfer under the coal legislation related to the right, title and interest in relation to the coal mines and the specified assets, not to the business as such. The statutory scheme showed that liabilities for the pre-vesting period remained enforceable against the owner, while the business itself continued. Section 17 applies where the ownership of the business is transferred absolutely and the transferee carries on that business. On the facts, that requirement was not satisfied.
Conclusion: The contention that section 17 displaced the petitioner from liability as registered dealer was rejected.
Issue (ii): whether the best judgment assessment was arbitrary and liable to be set aside for want of any rational basis.
Analysis: A best judgment assessment is permissible, but it must rest on some material and bear a rational nexus to the turnover determined. The assessment order did not rely on past records, comparable dealers, books of account, or any other objective basis. The estimate of turnover and denial of exemption were therefore unsupported and whimsical.
Conclusion: The assessment was held to be arbitrary and was set aside, with a direction for fresh assessment after giving reasonable opportunity.
Final Conclusion: The petitioner succeeded on the challenge to the assessment order, and the matter was remitted for a fresh assessment in accordance with law after opportunity to the petitioner.
Ratio Decidendi: A best judgment assessment must be founded on material having a rational nexus to the turnover estimated, and a transfer of statutory rights in coal mines does not by itself amount to a transfer of the business ownership so as to attract the transfer-of-business deeming provision.
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